Compliance and risk management has never been more complicated. Not only are authorities more activist in nature, but new requests for financial markets have also been made by the regulations introduced in the last few years.
FREMONT, CA: In 2020, Europe's financial markets watchdog released draft guidelines for outsourcing part of its technology resources to cloud service providers. The European Securities and Market Authority warned against dependency while understanding cloud computing advantages, decreased costs, and increased operating performance and versatility.
In terms of data protection and information management, the cloud poses problems, according to the report. As a consequence of multiple businesses utilizing the same large cloud service providers, concentration vulnerability will also occur with possible adverse financial stability effects. Not only a risk of concentration, but the study also pointed out the risk of lock-in. Banks, insurance agencies, and other financial services firms take care of this.
Compliance and risk management has never been more complicated. Not only are authorities more activist in nature, but new requests for financial markets have also been made by the regulations introduced in the last few years. For instance, the 2018 EU General Data Protection Regulation (GDPR) did not merely demand better protection for personally identifiable information; it required the transmission and removal of data on request. This, in turn, demanded a degree of resilience that many companies have found daunting. Similarly, the second Payment Services Directive (PSD II) required data portability at a scale that would pave the way for open banking.
For banks used to taking ultimate care of their data, think the non-returnable disk, these changes have shifted, not only by responding to modern technological solutions and business procedures but also by invoking a new corporate ethos.
There is another cause for increased difficulty; the highly varied make-up of most organizations' IT properties. Today, the cloud is just one aspect of a hybrid architecture. None of it is insurmountable. Nor does it dissuade companies from taking to the cloud. It does, however, entail a fresh look at the individuals, processes, and technology that will allow one to access, handle and monitor the data one carries. To this purpose, compliance and risk management should be discussed in the following three dimensions:
Flexibility and Agility: How simple is it to transfer data, workloads, and applications around various parts of the estate?
Compliance in the Cloud: To what degree does the supervision of data sets stored in, or flowing through, the cloud meet regulatory standards and the own business continuity needs?
Protection and Encryption: What mechanisms does one have in place to guarantee the confidential data is protected?
